Should I make claim for esa?

cpnan

Hi everyone, shortly after Christmas I will be dismissed from work on health grounds.  I have already filled out UC50, waiting for an assessment.  I’m wondering if I should make a claim for esa too?  I know if I got it, it would be taken out of my uc, so I’m not sure if there’s any point in claiming?  TIA.

calcotti

You are correct that if you claim ESA alongside UC you are no better off because the ESA is deducted from the UC.

The argument for claiming ESA also is that it is not means tested so if you think there is a chance that you might have a change of circumstances which would result in no UC entitlement (inheriting some money, moving in with a partner in full time work for example) then claiming ESA means that you would still have income of your own.

ESA is paid fortnightly whereas UC is paid monthly which some people prefer. Others prefer the monthly payments only.

On ESA you get Class 1 NI credits whereas on UC you only get Class 3. Class 1 credits count for benefits other than State Pension whereas Class 3 only count for State Pension - for many people this may not be a major consideration, they will be mostly concerned about State Pension.

The downside is that ESA is taxable income whereas UC is tax free. If you have already used up your tax free allowance for the current tax year you may prefer not to claim ESA because doing so will give rise to a tax liability. If your NI contributions are complete for 2019-20 and 2020-21 you will be able to claim ESA, if you want to, at any time in 2022 so you could still claim after 6th April 2022 by which time we will be into new tax year. After December 2022 you may not have the option to claim ESA because you may not have a complete Class 1 NI record for 2021-22 (that will depend on how much you have earned to date).

poppy123456

To claim New Style ESA now you will have needed to have paid the correct amount of NI contributions in tax year April 2018 to March 2020. If you claim in January the tax years change to April 2019 to March 2021.

Although it's deducted £1 for £1 from any UC entitlement because New style ESA isn't means tested, it's always worth claiming it, if eligible. You never know what will happen in the future and with the ESA savings/capital, a working partner and a works pension up to £85 per week are all ignored for this ESA.

It's also paid fortnightly and can help you to budget better because UC is paid monthly. It also pays class NI, where as UC only pays class 3.

Providing you are not currently claiming SSP you can start a claim for ESA now, if you've paid those NI contributions.

calcotti

poppy123456 said:..because New style ESA isn't means tested, it's always worth claiming it, if eligible. ..

Although I generally agree I do think tax liability is a consideration as referenced in my reply.

poppy123456

calcotti said:

poppy123456 said:..because New style ESA isn't means tested, it's always worth claiming it, if eligible. ..

Although I generally agree I do think tax liability is a consideration as referenced in my reply.

Agreed, forgot to mention that. I see we cross posted and didn't see your reply when i posted.

cpnan

Thank you everyone.  I will apply once I know when my employment/ssp ends.

poppy123456

You can apply 3 months before your SSP ends but you won't receive any money until it ends. You do not have to wait until your employment actually ends.

cpnan

Thank you Poppy, I thought I needed to know when my ssp ends, I will look at applying today.

calcotti

cpnan said:

Thank you Poppy, I thought I needed to know when my ssp ends, I will look at applying today.

Yes, you do need to know when you receive SSP ends. Poppy didn’t say that you didn’t, just that you didn’t need to wait until it ended. You will need form SSP1 from your employer.

cpnan

Ah ok thank you, will wait for that information regarding ssp.